ANALYSIS: Uganda Telecom troubles

Cash strapped UTL managers chase capital to fund three years turnaround strategy

Uganda Telecom is one of the oldest telecom companies in the country and the third in terms of subscriber base now standing at less than two million out of the 22.97million mobile phone users, writes Julius Businge.

Owned by Libya’s LAP GreenN with 69% and the government of Uganda retaining the rest of the shares, the company is in dire need of capital injection amounting to billions of shillings to invest in key infrastructure and consequently enabling it regain its popularity of serving widespread fixed, mobile and data services to different target customers.

But as efforts were underway to raise the capital, a dossier regarding mismanagement of the company was presented in Parliament on Nov. 17 putting the top managers into   panic, and placing its prospect in accessing funds in uncertainty.

The company’s physical address – Plot 2A-4A, Speke Road – Kampala was a beehive of activity in the afternoon of Nov. 18 a day after Parliament discussed a dossier exposing awful allegations in the company.

Top management officials had been named in the dossier as ones adding an injury to an already wounded partially government owned and Uganda’s oldest telecom company.

The dossier that was presented by Nathan Nandala Mafabi, an accountant and Member of Parliament for Budadiri West County alleged that the company was facing serious management problems and corruption scandals.

Top officials hurried to clear their names that afternoon. Stephen Kaboyo, the Board Chairman, Mark Shoebridge, the managing director, James Wilde, the chief financial officer and David Nambale, the corporation secretary shakily sat to address the media on 4th floor in the Boardroom.

“We refute the contents of the published statements for being incomplete or factually incorrect,” that was Kaboyo’s first stern response to the allegations.

The allegations 

Nandala’s allegations which he said would collapse the company soon if not urgently attended to included; frequent changes of top management, absence of audited books of accounts, high levels of indebtedness to service providers and Uganda Revenue Authority, illegal sale of company assets, inequitable remuneration amongst staff and top officials, useless [frequent] travels to outside countries, threatening of staff, poor quality of service, and misappropriation of funds among others.

Kaboyo, however, admitted that the company had challenges which he said, were historical but promised that they were working hard to turnaround the performance.

“As professionals we don’t fear the task,” he said, “we are here to solve these problems. Turning around a company like this one takes time.”

In other response, Kaboyo said the company has been “audited each year by reputable firms such as KPMG and Ernst & Young which was contrary to the MPs report that alleged that for many years, no auditing had been done on the company accounts or assets. He said that the 2015 audit report was being handled by Ernst & Young and would be completed soon.

On debt, Kaboyo agreed that the company has significant levels of debt that will be addressed by shareholder capital. He said, the debt includes statutory and trade creditors including National Social Security Fund, Uganda Revenue Authority, and the Uganda Communications Commission.

Without giving specific numbers, Kaboyo said top managers were engaging shareholders on how best to raise capital to meet these debts.

On NSSF, he said eligible NSSF remittances have been resumed since February, 2016; and the court case- involving Huawei Ltd seeking payment of debts had been withdrawn in October. He also said that the company has settled 88% of the amount it owes to its competitor MTN Uganda as interconnection fees.

On salary arrears, he said every 30th of the month their staff get paid and no one is demanding at the moment.

On allegations of asset stripping, Kaboyo said only two properties had been disposed of through proper governance and approvals from the Board of Directors and shareholders. The two properties include; plot 41-47 – 5th Street Industrial Area which was sold at $5 million, and Plot 1-7 Nsambya Yard, sold at US$1.75 million.

With regard to remuneration, Kaboyo said the telecommunication industry is very competitive and you have to pay well if you are to attract good brains.